Tom Thomas Organization, Inc. v. Reliance Insurance

Lindemer, J.

(dissenting). This lawsuit involves a claim for payment under the provisions of an insurance contract. The Court of Appeals has held the insured’s (Tom Thomas) suit against the insurer (Reliance) is barred by a contractual limitation. We agree.

Tom Thomas, a producer of motion pictures, entered into an insurance contract with Reliance which contained the following clause:

”7. Suit: No suit, action or proceeding for the recovery of any claim under this policy shall be sustainable in any court of law or equity unless the same be commenced within twelve (12) months next after discovery by the Insured of the occurrence which gives rise to the claim.”

Subsequently, the following events occurred:

12-14-71 Approximately 8,000 feet of exposed but unprocessed 16-mm motion picture film and 10 reels of recorded 1/4-inch sound tapes in transit from Jackson Hole, Wyoming to New York, New York could not be located at their destination. As of mid-January, 1972, the * tapes and films remained missing.

1-20-72 In a telephone conversation an employee of Tom Thomas reports the events of 12-14-71 to Reliance’s agent, Marsh & Mc-Lennan.

Mid-January, 1972 In order to fulfill its contract, Tom Thomas is required to return to location in Wyoming and refilm and rerecord the entire *599film episode. The new films and tapes are completed and delivered to Tom Thomas’ client in February, 1972.

3-7-72 Tom Thomas files a written claim and proof of loss as required by the insurance policy. The claim is for expenses incurred during the refilming.

3-23-72 The original tapes and films are recovered intact at an airport in Bozeman, Montana. Tom Thomas immediately notifies Reliance that the films have been located.

6-22-72 Tom Thomas’ claim is denied by Reliance because:

1. ) There was no direct physical loss or damage to the property.

2. ) The policy excludes loss of market, damage or deterioration arising from delay, whether such delay be caused by a peril covered or otherwise.

3-16-73 This lawsuit is commenced in Oakland Circuit Court.

Tom Thomas objects to the summary judgment treatment ordered by the Court of Appeals. Initially, Tom Thomas contends that it has complied with the 12-month limitation period. To accept that argument is to believe that recovery of the films on March 24, 1972, was "the occurrence which gives rise to the claim”. Plaintiff itself describes the claim as arising "from the property being unavailable, thus necessitating the reshooting of the film in order to satisfy plaintiff’s contractual commitments (the basis of the second claim)”. Plaintiff’s brief at page 13. Such cost is "occasioned” not by the recovery but by the original loss of the film. Under the contractual lan*600guage the date of loss for this cause of action is December 14, 1971, not March 23, 1972.

Next Tom Thomas argues that the conduct of Reliance preceding the June 22d denial amounted to either waiver of the contractual limitation or estoppel to assert it. Waiver is the voluntary relinquishment of a known right. Estoppel is a bar or impediment to the assertion of a right. Estoppel occurs when a party’s action induces detrimental reliance in the other party. We find nothing in the record to indicate that Reliance waived its right to assert the 12-month contractual limitation. Also without merit is Tom Thomas’ claim that Reliance should be estopped from pleading the contractual limitation. The trial judge found the doctrine of estoppel should be applied to the case. The Court of Appeals, in an unpublished per curiam opinion, Docket No. 19309, released October 23, 1974, rejected that notion:

"The courts of this State have long sustained the validity of provisions similar to the one herein involved, so long as the insurance carrier does not lull plaintiff into a feeling of false security and prevent the filing of timely suit. Dahrooge v Rochester German Insurance Co, 177 Mich 442; 143 NW 608 (1913). It makes no difference whether or not such limitation is created by statute or by contract. Guastello v Citizens Mutual Insurance Co, 11 Mich App 120; 160 NW2d 725 (1968). In the instant proceeding, plaintiff was notified of defendant’s rejection of its claim, on June 22, 1972. Plaintiff had approximately 6 months before the limitation expired in which to file suit, yet it did not. Such failure is fatal and requires reversal of the trial court’s denial of defendant’s motion for summary judgment. Vestevich v Liberty Mutual Insurance Co, 47 Mich App 490; 209 NW2d 486 (1973); see also Robinson’s Home Outfitting Co v Globe Indemnity Co, 31 Mich App 104; 187 NW2d 522 (1971).” *601We agree. The concept of detrimental reliance is at the heart of the estoppel doctrine. In the context of this case, the detriment which must have been suffered is the inability on the part of Tom Thomas to file their lawsuit within the contractual limitation period. We are unwilling to say that Reliance’s actions prior to their denial of liability on June 22, 1972, deprived Tom Thomas of a reasonable opportunity to file a timely lawsuit.

In an . effort to avoid the effect of the 12-month limitation, Tom Thomas, relying upon Peloso v Hartford Fire Insurance Co, 56 NJ 514; 267 A2d 498 (1970), argues that the running of the limitation period should be tolled from the date of notice of loss until the date of denial of the claim. This argument is discussed and adopted by the signatories of Justice Levin’s opinion. While we express no opinion concerning the wisdom of this approach, we believe the adoption of this change in the law should be accomplished through the legislative process rather than by judicial fiat. To adopt such a rule of law is, in effect, to rewrite the contract in favor of the party which, for a six-month period, was guilty of sleeping on its bargained-for rights. We cannot agree that appellants are entitled to this sort of relief.

Finally, Tom Thomas argues that the 12-month limitation period should not be applied on the grounds of unconscionability. Tom Thomas alleges that the clause involved was from a standard form insurance policy used throughout the industry and that there was a wide disparity in the bargaining power of the parties. Even assuming these facts to be true, we still reject the argument. Unconscionability has been defined as:

" * * * an absence of meaningful choice on the part *602of one of the parties together with contract terms which are unreasonably favorable to the other party.” Williams v Walker-Thomas Furniture Co, 121 US App DC 315, 319; 350 F2d 445; 18 ALR 3d 1297 (1965).

We cannot accept the argument that the 12-month limitation period should be found so commercially unreasonable that it shocks the conscience of this Court to find that it was included in this contract.

We would affirm the Court of Appeals.

Coleman, J., concurred with Lindemer, J.